Driving Corporate Culture From The Top

Driving
corporate
culture
from the
top
Board Leadership Center
Global Boardroom Insights
Insights from around the globe:

George Anderson – Spencer Stuart
Thomas Wescott – Eximbank Tanzania
Tessa Bamford – Wolseley plc
James Lam – E*TRADE Financial
Antony Jenkins – Blockchain
Inês Correa de Souza – Magazine Luiza

2 Driving corporate culture from the top
Foreword
Businesses are operating in a climate of
volatility and uncertainty resulting from
a broad range of factors, from Brexit
and the U.S. presidential election to the
unprecedented pace of technological
change, disruption, geopolitical risk,
and slow economic growth. In such an
environment, cultivating a strong corporate
culture from the top level all the way down
through the organization is key. It is a topic
high on the agenda of business leaders
and regulators.
One of the fundamental roles of leadership is to create
and maintain a culture that reinforces the company’s
core values, encourages employees to do the right
thing, and helps drive the company’s long-term
strategy. Culture, done well, can be a powerful driver of
organizational performance.
Given the importance of maintaining a healthy corporate
culture in a challenging business and risk environment,
the Audit Committee Institute interviewed directors
and subject matter experts from around the world to
gather their perspectives on the board’s role in helping to
reinforce, assess, and oversee the corporation’s culture.
In this edition of Global Boardroom Insights, we share
their insights, which we hope will help you to facilitate
robust boardroom discussions about the challenges
and opportunities related to corporate culture oversight
in your own organizations. While their individual views
offer varying perspectives, some universal takeaways
emerged from the discussions that should be
worthwhile for all boards to consider. By making culture
a regular item on the board agenda and asking the right
questions, directors can help to ensure that culture
supports business strategy.
Timothy Copnell David Leahy

United Kingdom Kenya
Dennis Whalen Sidney Ito
United States Brazil
Wim Vandecruys
Belgium
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Driving corporate culture from the top 3
Key interview insights

Culture is not simply a once (or twice) a
year discussion.
Corporate culture should be part of the board’s agenda
and ongoing conversation throughout the year.
Strategy, risk, and culture should be

tightly connected.
Culture needs to be embedded in the company’s
decision-making processes, including strategic thinking,
risk management and compliance, performance, and the
incentives driving these activities.
Culture should start at the top and cascade

down through all levels of the organization.
In addition to its monitoring role, the board plays a critical
role in helping shape the tone at the top by modeling the
behaviors leadership wants to drive.
Make sure the board is getting an unfiltered

view of the company’s culture.
Ensure robust reporting processes are in place, including
capturing red and yellow flags as well as indicators of
“good” culture.
Leverage internal audit to help assess and

monitor culture.
Consider incorporating a culture/values assessment in
the annual internal audit plan to help measure whether/
how employee behavior and practices reflect the
company’s culture and values.
Interviewees
George Anderson Thomas Wescott Tessa Bamford (UK)

(U.S.) (Tanzania)
“Culture is not the aspirational “Strong, appropriate cultures can “Culture and strategy go hand
values posted on the break room be used to help build significant in hand and a misalignment
wall, but the 'unwritten rules' that competitive advantage.” between the two spells trouble. It
actually drive the thousands of starts with a clear understanding
Thomas Wescott currently is an
decisions employees throughout of the strategy, the existing
independent director on the board
the company make every day.” culture and the culture required
of Eximbank Tanzania – a regional
to deliver the chosen strategy.”
George Anderson leads Spencer commercial bank based in Tanzania
Stuart’s Board Effectiveness with subsidiaries in Uganda, Djibouti, Tessa Bamford is a non-executive
services in North America. He and Comoros – where he is director at Wolseley plc and
advises clients whose boards chairman of the bank's board audit Barratt Developments plc and is
are undergoing transitions in and risk committees. He worked a consultant at Spencer Stuart.
governance, composition, and for more than 25 years as a senior She was formerly a founder and
leadership. banker and executive director with Director of Cantos Communications,
HSBC Equator Bank – a subsidiary the online corporate
He has created and led multiple of the HSBC Group focused communications service provider
director networks, including Spencer exclusively on sub-Saharan Africa. (2001 to 2011). Previously, she was
Stuart’s New Director Program and a Director of J Henry Schroder &
groups of audit committee chairs, Co, where she worked for 12 years
compensation committee chairs and in a number of roles between 1986
lead independent directors. and 1998. Prior to that, she worked
in corporate finance for Barclays de
Zoete Wedd.
Additional insights on
cultural change...
James Lam (U.S.) Inês Correa de Souza Antony Jenkins (UK)

(Brazil)
“The design of performance “Culture should be considered “The board should positively
measurement and incentives the most important value in any champion the desired culture
is probably one of the most organization, as it will drive the all the time. The behaviors
important levers of culture. People way a company does business and board members exhibit
don’t do what you tell them to do, establishes relationships with all set the tone for the whole
they do what you pay them to do.” of its stakeholders, including the organization. Every action you
government and regulatory bodies.” take will be acutely observed.”
James Lam is president of James
Lam & Associates and a director Inês Correa de Souza is founding Antony Jenkins held the post
of E*TRADE Financial, where he partner of Latitude Gestão e of Group CEO of Barclays from
chairs the risk oversight committee Finanças. She is also director 2012 until July 2015. In 2013,
and serves on the audit committee. at Magazine Luiza, Manserv he launched a comprehensive
Lam is an NACD Board Leadership Investimentos e Participações, and program of cultural change at
Fellow and a member of the COSO Stogas, where she serves a member the bank.
ERM advisory council. He previously of the audit and finance committee.
served as founder and president of She is also co-chair of the Rio de It was recently announced that
ERisk, as a partner of Oliver Wyman, Janeiro chapter of Woman Corporate Jenkins has joined the board of
the chief risk officer of Fidelity Directors. the fast-growing fintech start-up
Investments, and chief risk officer of Blockchain.
GE Capital Markets Services. Lam
was named Risk Manager of the
Year by the Global Association of
Risk Professionals in 1997 and one
of the “100 Most Influential People
in Finance" by Treasury & Risk
magazine in 2005, 2006, and 2008.
Lam is the author of Enterprise
Risk Management: From Incentives
to Controls.
Should the George Anderson:

Organizational culture should be discussed
organization’s culture as needed and aligned with other activities
and issues that the board is addressing. For
be a regular discussion example, the board can use the opportunity
of the annual strategy retreat or strategy
item on the board review to review the ways the organizational
culture supports or hinders the company
or audit committee strategy. Similarly, as the board plans for
CEO succession—whether defining the profile
agenda? And if so, of the next leader or assessing succession
candidates—it should include a discussion of
what’s the scope and company culture. The arrival of a new CEO, a
crisis, a new strategy, or merger (especially)
nature and frequency are all situations when the board should ensure
that it understands the corporate culture and its
of that discussion? impact on performance.
Thomas Wescott:
Definitely. Boards have a responsibility to
regularly monitor and assess a company’s
culture, while executive management is
accountable for driving the culture. Boards
should hold the CEO and senior executives
accountable for doing this. Where boards
become aware that the CEO or other senior
executives are not demonstrating the desired
behaviors, the board should take action.
Audit, risk, nomination and remuneration
committees should take the lead in addressing
culture. Internal audit should incorporate a
values assessment in the annual audit plan
that reviews the extent to which the company’s
culture and values are evident in the behavior
of employees. Internal audit’s positioning,
reach, independence, and accountability
ideally position it to identify areas of potential
weakness. Risk and remuneration committees
are well placed to evaluate the alignment of
incentives, values, and behaviors.
Tessa Bamford: James Lam:

It is often said that “culture eats strategy for I believe the board should monitor and discuss
breakfast” so yes it should be very high on organizational culture on an ongoing basis,
the board agenda. Strategy away-days are including event-driven discussions and a formal
important and perhaps the starting point for review at least annually. The scope of the review
any discussion around culture—that’s where may encompass the overall organizational
the big picture starts. But equally it is important culture or may target a specific element, such as
that culture is addressed when discussing other the sales culture or risk culture.
board issues whether that be the risk agenda,
As an example, at E*TRADE we have been
CEO succession or technology. It’s not just a
very focused on our “risk culture” over the
once a year conversation.
past four years. We have established an
effective and robust risk culture program.
The program includes executive town halls
to set the tone from the top, customized risk
“Boards have a training and workshops by function, alignment
with performance management and reviews,
responsibility to as well as an annual all-employee survey
to gauge overall risk awareness. The Risk
regularly monitor and Oversight Committee, which I chair, reviews

the program execution and survey results
assess a company’s annually. Over time, we have seen steady and

material improvements in the level of employee
engagement and openness, understanding
culture, while executive of individual accountabilities, and effective
challenge with respect to risk management.
management is
Inês Correa de Souza:
accountable for Certainly the organization´s culture should be a
regular discussion item either at the board level
driving the culture.” or at the audit committee. The organization´s
culture should be considered the most
important value in any organization as it will
drive the way a company do business, establish
the relationship with all its stakeholders,
including the government and regulatory
bodies. As such it should be transmitted to
all levels of the organization, and the board
must act in accordance with such culture
providing guidance to the whole organization.
The discussion should occur whenever it is
appropriate, depending on the circumstances
and the level of awareness within the
organization.
What are the signs George Anderson:

Cultural patterns can produce innovation,
of “good” corporate growth, market leadership, ethical behavior,
and customer satisfaction. On the other hand,
culture? What are a damaged culture can impede strategic
outcomes, erode business performance,
some red flags when diminish customer satisfaction and loyalty, and
discourage employee engagement. However,
there’s a bad culture? in general, the issue may be less about having
a “good” or “bad” culture and more about
ensuring that the culture is aligned with
strategy and performance objectives.
Thomas Wescott:
Positive signs include an enjoyable, stimulating,
supportive place to work; minimum office
politics, a results-oriented atmosphere where
everyone cares for and is respectful of each
other, and employees see the company as
an excellent place to learn and grow. In the
best company cultures, employees trust
management, have a sense of pride in their
work, enjoy their colleagues, and the culture
serves the business’s strategy.
Research has shown that the key components
of a strong, positive corporate culture include
vision—a mission statement that guides the
company’s values, defines its purpose, and
provides a strong foundational element for
its culture; values—a company’s “DNA”—the
guidelines on behaviors and mindsets required
to achieve the vision; and practices, meaning
that those values must be embedded into the
day-to-day activities, practices, and operations
of all employees. The other components of a
strong culture are people, place, and narrative.
All employees must share and embrace the
company’s core values. Recruitment must be
focused on finding not just the most talented
employees, but those best suited to the
company’s culture. Place can also shape culture.
Office location and design can affect employee
behavior and values. For example, open plan
office design can encourage collaboration. James Lam:

Finally, the company’s narrative can be a In a typical corporate culture, people will do the
key core element of culture creation. A good right things when policies and controls are in
narrative/story can be important in defining place. In a good culture, people will do the right
and shaping the ongoing development of a things even when risk policies and controls are
company’s culture. not in place. In a bad culture, people will not do
Red flags could include high employee the right things regardless of risk policies and
turnover; poor morale; employee surveys controls.
showing that people feel reluctant to speak Consider the investment banks that went
for fear of retribution, don’t feel trusted to do bankrupt or nearly so during the 2008 financial
their job, or don’t see how their personal work crisis. I am not sure if those same banks would
contributes to overall company goals. Other have gotten into such perils if they were still
warning signs might be compliance issues under the partnership structure and culture,
with regulators, a high number of customer when the partners’ capital and reputations
or supplier complaints, and poor business were on the line. Under a corporate structure
performance. and culture, even with more sophisticated
risk models and controls, those banks took on
Tessa Bamford: excessive risks.
Culture is difficult to measure but it is as Another clear sign of the health of an
important as a sound strategy, robust controls organization’s culture is how good people vote
or a good supply chain. Good corporate culture with their feet. If top performers are leaving
might be reflected in innovation, growth and the company, or rejecting competitive offers to
positive customer and employee satisfaction join the company, a poor culture could be the
data. One red flag to watch out for would be reason.
executives who don’t like their non-executive
colleagues getting out into the business and
‘walking the floors’. Constructive information
A good corporate culture is based on trust,
gathering – whether through talking to staff or
transparency, and ethics. People enjoy working
maybe a ‘mystery shopper’ exercise should
for any organization with such values, and with
always be welcomed in businesses with a
a positive organizational climate. Therefore
good culture.
a sign of good corporate culture will be the
ability the organization has to foresee its
“Cultural patterns can future with creativity, to anticipate changes
and to search for innovation. I would consider
produce innovation, red flags to be: high turnover of personnel,
compensation practices that are not very clear,
growth, market poor communication top down, poor quality of

management and high level of work accidents.
leadership, ethical
behavior, and customer
satisfaction.”
How can the board get George Anderson:

It starts by gaining a clear understanding of
its arms around the strategy, followed by an understanding of the
current culture and the culture required to
connection between achieve the strategy. This requires a framework
for diagnosing organizational culture.
organizational Boards also should assess whether the CEO
culture and strategy and executive team have the cultural fluency
needed to define the company’s culture, and
(innovation, customer ensure that they are attentive to culture and its
impact on business performance. To this end,
satisfaction, etc.) and boards may decide to consider an executive’s
ability to manage culture as part of individual
risk (health and safety, performance reviews and the succession
planning process. Just as they evaluate the
ethics/compliance)? soundness of the business strategy and
challenge its underlying assumptions, boards
should be willing to spark discussion about the
need for cultural change when necessary.
Thomas Wescott:
Strong, appropriate cultures can help build
significant competitive advantage. Research
suggests that the best-performing companies
have well-aligned strategies and cultures that
typically share attributes such as high integrity
in all interactions with employees, customers,
suppliers and other stakeholders; a focus on
performance management with compensation
closely tied to performance; strong individual
accountability and ownership; agility and
adaptivity; and innovativeness.
Tessa Bamford: James Lam:

Culture and strategy go hand in hand and a Strategy and risk management are critical
misalignment between the two spells trouble. It drivers of organizational culture. At the
starts with a clear understanding of the strategy, onset, there must be alignment between the
the existing culture and the culture required overall business strategy and the risk appetite
to deliver the chosen strategy. The most statement that defines acceptable risks. The
important thing to think about when diagnosing selection of key performance metrics and
the culture of the organization is how the targets also influences culture and behavior. For
organization responds to change and how it example, if the targets for sales and profits are
thinks about the contributions of its people, too aggressive, that may motivate excessive
both as individuals and in groups. A further risk taking. During the execution of the strategy,
complication might be that the organization there may be natural conflicts between strategic
wants different cultures within different parts goals and risk management constraints. How
of the business – perhaps a caring and sharing does management resolve these conflicts? The
culture to achieve one strategic objective and board should be concerned not only about what
a dynamic thrusting culture to deliver another. business results are produced, but how they
This is achievable, but it requires a joined up were produced.
approach from the top of the organization.
Finally, the design of performance
measurement and incentives is probably one
of the most important levers of culture. People
don’t do what you tell them to do, they do what
“It starts by gaining a you pay them to do.
clear understanding Inês Correa de Souza:

If a company has a sound organizational culture
of strategy, followed all stakeholders easily identify its vision and
values. It serves as the foundation for strategic
by an understanding of thinking about the future of the organization,

understanding challenges, threats and
opportunities, and identifying risks.
the current culture and
the culture required to
achieve the strategy.”
Beyond a company’s George Anderson:

That’s exactly right. Culture is not the
stated corporate aspirational values posted on the break room
wall, but the “unwritten rules” that actually
values, many see drive the thousands of decisions employees
throughout the company make every day.
culture as the Boards can get at the health of the culture by
asking questions such as: What organizational
“unwritten rules” behaviors are required to achieve our strategy?
How well do we demonstrate those behaviors
of the organization. today? What do we measure to understand
the extent to which those behaviors are
How do you go about happening—for example, where product
innovation and a learning culture are keys to
getting a sense of the strategy, is a larger percentage of revenue
coming from new products? What do these
what those “unwritten findings tell us about our culture relative to our
strategy? Where do organizational behaviors
rules” are? open us up to risk?
Thomas Wescott:
Probably the best means to understand what
is really going on in the company is by walking
around and informally talking to staff from
different levels, departments, and locations
to experience the culture firsthand. It’s also
important to meet with external stakeholders,
especially customers and suppliers, to learn
their views and to be attentive to the messages
they give.
Tessa Bamford:
That’s right. The unwritten rules are the shared identify the cultural styles that support their
assumptions that drive thinking, behavior and strategic imperatives and diagnose how the
actions on a day to day basis. Assessing these culture may need to evolve in order to align
"unwritten rules" – or the organizational culture with strategy.
– is rooted in the insight
that a surprisingly limited
set of rules can result in “Probably the James Lam:
The board needs be aware
highly complex and diverse
behavioral patterns. Every
organization, and every
best means to of how stated corporate
values and written policies
board, must address the
inherent tension between
understand what are interpreted and applied
within the organization. Most
companies say that they
two critical dimensions of
organizational dynamics
is really going on value their customers and
employees, and that they
– attitude toward change
and attitude about people. in the company operate with the highest ethical
standards. But what really
is by walking
Attitude towards change matters is the actions that
is the balance between management takes when there
being open to change
(flexibility, innovation
and enquiry) and the
around and are organizational conflicts,
customer complaints, employee
informally talking
grievances, and ethical lapses.
management of change The “unwritten rules” are set
(stability, proven processes by the cumulative actions and
and control). Attitude about
people is the balance to staff from reactions of the organization’s
leaders.
between independence
(individual initiative and different levels.“
self-empowerment) and
interdependency (collaboration and power
through groups). A company’s culture is defined
by where an organization falls on these two
dimensions, and this reflects how employees
make individual decisions to manage the
costs and benefits associated with those
tensions over time. Applying such insights help
companies understand their current culture,
How do you tie the George Anderson:

As the saying goes, “culture eats strategy for
impact of culture breakfast”—a company’s culture can make or
break even the most insightful strategy or the
to the company’s most experienced executives. Yet it is one lever
of performance that rarely appears on board
performance – as a agendas. Despite its important contribution to
business results, few boards oversee culture
lever of stakeholder with the level of rigor that they do strategy, risk,
or CEO succession planning.
value – given that Most boards can do more to help ensure that
culture is such a senior management is effectively monitoring
and guiding corporate culture and making the
soft element of the most of this important contributor to business
performance. By placing culture on the board
business? agenda and asking the right questions, boards
can deepen their understanding of the company
culture and help to ensure that culture supports
business strategy.
Thomas Wescott: James Lam:

The board needs to have continuous As with anything we do in life or business, to
discussions with the CEO and senior do it well, we need a feedback loop to facilitate
management team about values and culture. continuous improvement. A feedback loop is
Creating a dashboard that can be used to simply an iteration of clearly stated objectives,
monitor key indicators of company culture actionable input levers, and measurable
can be a useful tool for both the board and output results. Even though culture is a soft
senior management. Dashboard data could element, it can be broken down into those three
include employee survey results, hotline calls, components.
management appraisals, as well as culture
The stated objectives should include the target
related issues arising in areas such as health
culture and expected behaviors that would
and safety, compliance, and customer relations.
support the company’s mission, strategy and
A specially trained internal audit team can business objectives. The actionable input levers
help develop the dashboard and begin to include the company’s people, processes, and
“audit” the culture, interviewing employees, technology. Training programs, performance
managers, other stakeholders, and reviewing measurement, and incentive systems are the
processes and business practices, and other most critical processes. The measurable output
factors to measure day-to-day practices against results include both the ends and means of
the company’s values, behavior, codes of corporate performance, feedback from key
conduct, etc. stakeholders including employee surveys, and a
gap analysis of actual and expected behaviors.
If the output results are not consistent with
the stated objectives, the company should
“By placing culture understand why and consider making changes
to the input levers.
on the board agenda Inês Correa de Souza:
and asking the right The impact of the culture to the company´s
performance can be relevant, either on a
questions, boards positive or negative way. Although it may
take some time for stakeholder to perceive,
can deepen their companies with good corporate culture in the

long term will perform better because their
understanding of
ability to change and to innovate. The alignment
between all parties involved will be key to
promote such positive impact.
the company culture
and help to ensure
that culture supports
business strategy.“
Generally speaking, George Anderson:

Despite the growing appreciation for the role
what do you see as of culture in business performance, many
organizations still struggle to get their arms
the biggest gaps/blind around it. There are several reasons for this.
One challenge is the board’s lack of visibility
spots for boards (and into the culture. Distant from the day-to-day
activities of the organization, it’s not easy for
companies) today directors to gain a clear perspective on the
company’s culture. Nor is there consensus
in getting their arms on what the role of the board should be.
The board’s role in cultural oversight is not
around corporate as clearly defined—by rule or practice—as
in areas such as executive compensation or
culture? risk oversight. Finally, without a framework
to rely on, many organizations lack a shared
vocabulary with which to discuss culture—or
the health of the culture.
Thomas Wescott:
One is senior executives managing information
flow to the board to conceal issues and
problems. Boards need to better probe and
challenge, to ensure management is properly
embedding the desired culture.
Another is poorly designed and managed
employee engagement surveys that may
mislead the board on key issues. It is critical
that surveys are done by third parties that are
perceived by employees as being impartial,
with questions framed correctly, so employees
feel they can answer openly and honestly. The
board should also try to confirm survey results
through other sources to build a clear picture of
the interaction between values, behaviors and
decision making.
Another is directors who have only limited
contact with the company and its leaders, and
who are removed from day-to-day operations
and staff. It’s important for board members to
spend time in the field to see the culture at all
levels of the organization.
James Lam:
One of the key lessons learned from the 2008
financial crisis is that some of the biggest
risks—derivatives, special purpose vehicles,
leverage and liquidity impacts—don’t always
show up in the financial statements. To get a
more accurate gauge of organizational culture,
boards must expand their range of oversight to
reduce blind spots. For example, they should “Despite the growing
pay special attention to organizational barriers
to effective collaboration, online feedback from
key stakeholders, conflicted employee and
appreciation for the
vendor relationships, and business practices
at foreign subsidiaries. The board should
role of culture in
understand why key individuals and functions
are not collaborating, what current and former business performance,
employees are saying about the company
online (e.g. Glassdoor), and whether cultural many organizations
gaps exist across business units and locations.
The board should have a 360 degree view of
why key internal and external stakeholders are
still struggle to get
delighted or disappointed with the company.
At E*TRADE, we monitor reputational risk with
their arms around it.“
specific metrics and risk appetite tolerances for
our all of our key stakeholders.
Boards should not only look at risk events
and losses, but also at extraordinary profits
and growth. If a business unit is producing
outsized profits and growth, there should be a
spotlight on the underlying business practices
and culture.

In general the board needs to have a good
interface with employees at all levels to get
a good perception of the corporate culture.
However, such interface does not happen very
often and many cases, it does not seem to be
a priority on the board agenda. Committee
meetings are one way for directors to interact
with employees a level or two below senior
management.
Are there certain George Anderson:
events – i.e. major Culture should and does evolve over time.
Boards that are most proactive in this area
organizational or CEO/ regularly consider whether the culture is

aligned with the business strategy as part of
leadership changes, their annual strategy review. Other events that

merit a close review of the culture include the
or major shifts in arrival of a new CEO, a crisis, a new strategy,

or a merger. We also recommend that boards
strategic direction include a discussion of culture in their CEO

succession planning. The next leader will drive
– that call for the performance in a cultural context that may

not yet exist, and today’s talent management
board to be especially systems, employee evaluations, and executive

recruiting may or may not contribute to the
focused on culture? desired corporate culture. Boards will want to

understand how these processes are likely to
shape the future culture of the company.
Thomas Wescott:
Absolutely. Management changes. For many
boards, the single greatest influence they have
on the culture of a company is the appointment,
remuneration, and firing of the CEO—which is
one of the most important responsibilities of
the board. Cultural fit is a key issue and with a
focus on values and behavior.
Also mergers and acquisitions. Cultural fit,
values and behavior are critical considerations.
Boards need to assess the ability of the
business to achieve a cultural fit within a
reasonable timeframe and the downside costs
to the business of a cultural misalignment. It
is important to determine at the outset what
attributes to keep and leverage; and develop
a strategy to eliminate the less desirable
ones. This is a critical first step in any merger/
acquisition … getting employees aligned with a
culture that will help drive success.
James Lam: Inês Correa de Souza:

Major events, such as acquisitions, Certainly, in the case of any of the types
reorganizations, and leadership changes at of events mentioned, the board should be
the CEO, business unit and functional levels, particularly concerned with their impact on
can have a significant impact on culture. The the corporate culture. Therefore, it is of major
departure of cultural bearers on the board importance to carefully, before any such events,
or leadership team (e.g. founder) who are consider how to mitigate any potential risks
passionate about the company and its mission to the key values of the corporate culture and
could also have an impact. to monitor the implementation of any major
reorganization or shifts in strategic direction.
It’s important to keep in mind that, since culture
is the result of an organization’s decisions
and actions, those kinds of changes can also
provide an opportunity to shape the culture,
for example, to be more innovative, more
collaborative, or more risk aware.
“The next leader will drive

performance in a cultural context
that may not yet exist, and today’s
talent management systems,
employee evaluations, and executive
recruiting may or may not contribute
to the desired corporate culture.“
A conversation with In today’s business environment, the days where

you can just plan out the next two, five or ten years
Antony Jenkins: are over. Organizations are learning that agility is
key. One of the fundamental roles of leadership is
Implementing to create culture within an organization that allows
the business to respond and react effectively. Culture
cultural change is a powerful driver of organizational performance
so if you want to improve performance you need
leadership to drive the right culture.
Agility is key to a successful culture, but not always
simple to achieve. Jenkins spoke about boards and
individuals needing sufficient ‘bandwidth’ to be able
to remain agile in their approach. If they are always
fully consumed with day to day activities, then it is
unlikely that they will be truly agile. Conversely, high
performing organizations tend to do the basics very
well and this creates the time and space to be agile in
their approach. This agility allows the consideration
and development of issues beyond the board pack.
Implementing cultural change:

Instigating any kind of significant change within an
Antony Jenkins organization requires serious commitment, hard
work and determination, not least because human
beings are on the whole hard-wired to be change
“The board should positively champion the resistant. Jenkins acknowledged that culture change
desired culture all the time. The behaviors board is “not a panacea or a solution to bad actors” and
members exhibit set the tone for the whole that there is “no secret sauce” for culture change,
organization. Every action you take will be he offered five key steps that businesses may
acutely observed.” find useful:
Jenkins held the post of Group CEO of Barclays 1. Define the desired culture
from 2012 until July 2015. In 2013, he launched a It is important that culture is owned by the
comprehensive program of cultural change at the board (and executive). This step should not be
bank. It was recently announced that Jenkins has outsourced to, for example, a communications
joined the board of the fast-growing fintech start-up company. “Any light between what is stated and
Blockchain. what is required will most likely result in failure
of the cultural change program.” Defining culture
The following summary comes from a FTSE100
may involve affirming the organization's purpose,
ACI breakfast held in July 2016, where Jenkins, a
values and the behaviors that are seen to embody
prominent and insightful advocate for structured
and considered cultural change programs, shared these as well as linking these through to the
his views on implementing cultual change and the business strategy and its long-term goals.
actions directors can take to support this.
2. Align key processes with the desired culture Lead the charge from the top
How does the cultural definition impact key Leadership drives culture and this starts with the
organizational activity? Businesses may need to board, from how they deal with people to how
look at processes such as, how they hire, promote they deal with a problem. “Do board members
and reward people. Equally, mechanisms need to always treat people with respect? Think about
be in place to address behavior incongruent with it before you say you do.” Are board members
the desired culture. “Organizations will see straight always maximizing how they learn from problems
through the initiative if people who exhibit ‘bad’ or what a successful business unit is doing well
behavior are promoted.” that sets it apart? How often is leadership asking
questions such as “What is it you are doing
3. Embed culture into decision-making processes
that means you are achieving? Why are you
Integrity is key. An organization is not truly “living
succeeding more?” Jenkins highlighted behaviors
its values until it costs money.” There has to be
to look out for such as, board members ensuring
a price to pay such as turning down a profitable
they offer thanks and give feedback to those
business opportunity because the customers/
presenting to them at meetings or making sure
clients values or modus operandi are at odds with
they hold meetings regionally on occasion where
your own organizational culture. It is at this point
this is feasible. Attendees were asked to reflect on
that the culture is seen as truly embedded and
occasions where employees (who perhaps had
operational. Equally, “it shouldn’t be forgotten that
had sleepless nights in preparation) were asked
an organization is not truly living its culture until it
to ‘stand-down’ due to board meeting over-runs
makes money as well.”
and question how that sat with common value
4. Measure the culture statements such as ‘respect the individual’. “Being
The board needs assurance that people fully authentic is the thing, the tone from the top is
understand the desired culture, and feel key." Seemingly insignificant actions can speak
empowered to ‘live’ it day-to-day in their decision- volumes to employees in an organization.
making. This requires some form of measurement.
Measurement also helps identify people who need
help in getting to grips with the culture. Measuring
culture is perceived as difficult, but there are Jenkins also offered three steps for boards to
survey techniques and other tools designed to consider to help drive cultural change:
help organizations answer some basic questions. 1. Encourage calculated risk taking and accept
Jenkins talked about tracking whether employees that some initiatives will fail. Too much risk
(and other stakeholders): aversion will kill any business. How often
do you challenge whether people are taking
– understand what the culture is
enough calculated risk?
– observe the culture being lived
2. Collaborate on corporate governance.
– feel able to live the culture? What are The Board is the ‘check and challenge’
the obstacles? on the executive but where agility is
key, a more collaborative approach is
– are proud to work for (or be associated with)
important. The board and the executive
the company
are jointly responsible for the success of
Employee satisfaction surveys can, when properly the organization.
designed, look below the surface and provide
3. Positively champion the desired culture all the
meaningful metrics – for example, is a business
time. The behaviors board members exhibit
area scoring poorly as a result of staff reporting into
set the tone for the whole organization.
certain individuals or is it a generally held view?
Even things such as checking emails in the
In many organizations, internal audit play a key role
middle of a meeting will be noted. It is the
in providing the board with assurance that the ‘right’
responsibility of board members to model
culture is embedded across the organization.
the behavior. “Every action you take will be
acutely observed.”
“Culture is not the aspirational values

posted on the break room wall, but
the 'unwritten rules' that actually drive
the thousands of decisions employees
throughout the company make every day.”
KPMG Board
Leadership Center
The KPMG Board Leadership Center champions outstanding
governance to help drive long-term corporate value and
enhance investor confidence. Drawing on insights from KPMG
professionals and governance experts worldwide, the Center
delivers practical thought leadership—on risk and strategy,
talent and technology, globalization and compliance, financial
reporting and audit quality, and more—all through a board lens.
Learn more at kpmg.com/blc
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act
on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International
provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such
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Driving Corporate Culture From The Top

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Driving Corporate Culture From The Top

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Driving

Insights from around the globe:

Thomas Wescott – Eximbank Tanzania

Tessa Bamford – Wolseley plc

James Lam – E*TRADE Financial

Antony Jenkins – Blockchain

Inês Correa de Souza – Magazine Luiza

Timothy Copnell David Leahy

Key interview insights

Strategy, risk, and culture should be

Culture should start at the top and cascade

Make sure the board is getting an unfiltered

Leverage internal audit to help assess and

George Anderson Thomas Wescott Tessa Bamford (UK)

James Lam (U.S.) Inês Correa de Souza Antony Jenkins (UK)

Should the George Anderson:

Tessa Bamford: James Lam:

regularly monitor and Oversight Committee, which I chair, reviews

assess a company’s annually. Over time, we have seen steady and

What are the signs George Anderson:

office design can encourage collaboration. James Lam:

growth, market poor communication top down, poor quality of

How can the board get George Anderson:

Tessa Bamford: James Lam:

“It starts by gaining a you pay them to do.

clear understanding Inês Correa de Souza:

by an understanding of thinking about the future of the organization,

Beyond a company’s George Anderson:

How do you tie the George Anderson:

Thomas Wescott: James Lam:

can deepen their companies with good corporate culture in the

Generally speaking, George Anderson:

Inês Correa de Souza:

Are there certain George Anderson:

organizational or CEO/ regularly consider whether the culture is

leadership changes, their annual strategy review. Other events that

or major shifts in arrival of a new CEO, a crisis, a new strategy,

strategic direction include a discussion of culture in their CEO

– that call for the performance in a cultural context that may

board to be especially systems, employee evaluations, and executive

focused on culture? desired corporate culture. Boards will want to

James Lam: Inês Correa de Souza:

“The next leader will drive

A conversation with In today’s business environment, the days where

Implementing cultural change:

“Culture is not the aspirational values

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